The most overused expression that has come about since governments in Europe and the US have been unable to compromise on budget negotiations is “kicking-the-can down the road.”
The Triffin Dilemma, named after economist Robert Triffin, speaks to the balancing act required on the part of the government that stands behind the world’s reserve currency.
What is going on in Washington is more of a political charade than real budget negotiations; albeit, it is a distraction from the real structural problems created from a two decade period of credit-fuelled surges in consumption.
Although there are many uncertainties, one thing is clear; despite the Fed’s increased transparency and despite their efforts to provide forward guidance—against all efforts to the contrary they still have the ability to send financial markets for a tailspin.
These last few weeks have acted as a nice reminder that the fundamentals of the gold trade can span beyond the idea of Quantitative Easing and the US Federal Reserve.